Bloomberg News

U.K. Stocks Decline From a Seven-Month High; Tullow Oil Slides

February 21, 2012

Feb. 21 (Bloomberg) -- U.K. stocks dropped as investors speculated that Greece will remain stricken by debt even after the euro area’s finance ministers agreed to bail out the Mediterranean nation for a second time.

Energy companies led declines, as Tullow Oil Plc retreated 3.6 percent. William Morrison Supermarkets Plc, the smallest of the U.K.’s four largest food retailers, slid 0.8 percent after Goldman Sachs Group Inc. downgraded the stock. Croda International Plc rose 4.5 percent after posting 2011 earnings that beat analysts’ estimates.

The FTSE 100 Index fell 17.05, or 0.3 percent, to 5,928.2 at the close in London as four stocks dropped for every one that climbed. The gauge has still rallied 20 percent from last year’s lowest level on Oct. 4. The benchmark measure jumped 0.7 percent yesterday to its highest since July 8 as China cut its banks’ reserve requirements. The FTSE All-Share Index also dropped 0.3 percent today, while Ireland’s ISEQ Index decreased 0.8 percent.

“There’s an element of traveling is better than arriving,” said Gerard Lane, an equity strategist at Shore Capital in Liverpool, England. “There wasn’t anything surprising and there’s still a degree of doubt about whether the agreement holds because the conditions for Greece to meet are still quite difficult,” he said.

Greece’s Bailout Package

Euro-area finance ministers awarded Greece a 130 billion- euro ($172 billion) rescue, coaxed private creditors to provide more debt relief through a bond-swap offer and tapped into European Central Bank profits to avert the single currency’s first default. Investors will forgive 53.5 percent of their principal and exchange remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility, the International Institute of Finance said in a statement today.

U.K. stocks declined as investors considered an International Monetary Fund analysis that suggested Greece’s debt will still swell to 160 percent of gross domestic product in a worst-case scenario.

Britain posted its biggest budget surplus in four years in January as Chancellor of the Exchequer George Osborne’s spending cuts continued to take effect. Revenue exceeded spending by 7.75 billion pounds ($12.2 billion), compared with a surplus of 5.2 billion pounds a year earlier, the Office for National Statistics said today.

Tullow Oil Drops

Tullow Oil retreated 3.6 percent to 1,543 pence after Anadarko Petroleum Corp. failed to give a figure for the potential reserves at a well it operates in Sierra Leone. Tullow owns a 20 percent stake in the Jupiter-1 well.

BG Group Plc slipped 1.9 percent to 1,480.5 pence.

Morrison lost 0.8 percent to 295 pence after Goldman Sachs added the shares to its “conviction sell” list.

CSR Plc, the U.K. maker of chips used in Nokia Oyj mobile phones, tumbled 5.1 percent to 260.9 pence after it was downgraded to “hold” from “buy” at Numis Securities Ltd. and Canaccord Genuity Corp.

Croda International, the world’s second-largest maker of cosmetic ingredients, advanced 4.5 percent to 2,123 pence after posting pretax profit of 242.2 million pounds for 2011. That exceeded the average analyst estimate for 239 million pounds.

ICAP Plc, the world’s largest broker of transactions between banks, gained 1.6 percent to 395.8 pence after saying it will buy Singapore-based Island Shipbrokers Pte Ltd. to expand in Asia.

Admiral Group Plc, the U.K. car insurer that owns the confused.com website, climbed 3.2 percent to 1,043 pence after its rating was raised to “outperform” from “neutral” at Credit Suisse Group AG.

Vedanta Resources Plc jumped 7 percent to 1,453 pence after CNBC-TV18 reported on its moneycontrol.com website that the company may merge Sterlite Industries India Ltd. and Sesa Goa Ltd. The report said Vedanta will also transfer its 38.8 percent stake in Cairn India Ltd. to the combined entity.

“Vedanta’s stated strategy is to simplify and consolidate its corporate structure,” the company said in a statement following the report.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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